Former Autonomy CEO may be extradited in long-running HP acquisition case

[steven36]

The extraordinarily long-running saga over Hewlett-Packard Co.’s acquisition of Autonomy Corp. PLC for $10.3 billion in 2011 has taken a new twist as U.S. authorities reportedly are preparing an extradition order for Autonomy founder and former Chief Executive Officer Michael Lynch.

 

 

 

Lynch, a U.K. citizen, was charged a year ago with wire fraud and conspiracy in relation to the deal for overstating Autonomy’s performance ahead of the acquisition. Additional counts were added, including one of securities fraud in February, the Financial Times reported. Extradition proceedings are currently scheduled to begin by Dec. 1.

 

Autonomy was purchased by HP as part of its then plan to split the company in two, spinning off its computer business into a separate company with the remaining business eventually becoming Hewlett Packard Enterprise Co.

 

The deal was criticized early on before coming to a head in November 2012 when news broke that Autonomy had missed its revenue forecast by 90% – a figure SiliconANGLE’s John Furrier described at the time as the “crime of the century.” HP was not impressed, turning to the U.S. Department of Justice in December 2012 as they claimed it had been scammed on the deal given that Autonomy had inflated its business numbers prior to acquisition and had undertaken “accounting malpractices.”

 

After being forced to write down the acquisition of Autonomy by $8.8 billion, HP shareholders blamed their board for the debacle and took legal action. An initial settlement was rejected by a judge in 2014, but HP finally coughed up $100 million to settle the shareholder lawsuit in 2015.

 

The legal drama did not stop there, however. HP filed a civil lawsuit against Lynch, who countered with his own $160 million lawsuit in October 2015 claiming the allegations that he had cooked Autonomy’s books were false.

 

HP, now HPE, put Autonomy on the market in 2016, selling it bundled with other parts of its software business. Micro Focus was the buyer in a $8.8 billion deal that was finalized in September 2017.

 

The legal drama didn’t stop, however, as former Autonomy Chief Financial Officer Sushovan Hussain was indicted by a San Francisco court in November 2016.

 

Federal prosecutors alleged that Hussain and other unnamed executives “artificially inflated revenues, made false and misleading statements about Autonomy’s finances, put fraudulent entries into the company’s books, issued false and misleading quarterly and annual reports, and intimidated, pressured and paid off people who had raised complaints or criticized the firm’s financial practices and performance.”

 

Those other “unnamed executives” included Lynch. Hussein was convicted and sentenced to five years in jail in May. Stephen Chamberlain, formerly Autonomy’s vice president of finance, also stands accused of similar allegations. FT noted that both Hussein and Lynch are also fighting a $5 billion civil company brought by HP in the U.K.

 

Should extradition be ordered, Lynch will not necessarily be immediately put on a plane to the U.S. A court case in the U.K. over the potential extradition order is likely.

 

Source